The accountant has several different definitions of profit. Net profit is the residual of
revenue over money costs, which includes wages and salaries, rent, fuel and raw materials,
etc., and fixed interest payments, stock valuation and depreciation. This can be measured
before tax or after tax when corporation or income tax have been deducted. Gross profit
is net profit before the deduction of depreciation and interest payments. In the calculation
of profit rates, accountants use different conventions for calculating depreciation or
valuation of stock which makes a comparison of figures very difficult between firms,
industries and countries. Changing accounting conventions means that even for the same
organisation, over a period of time, meaningful comparisons are problematic. Added to
this, costs can be measured on an historic cost basis or a replacement cost basis, both of
which will give different figures. The accountant usually expresses profit as a ratio – the
return on capital employed or the return on equity, for example.